Texas Senate hearing: AGA and Kalshi testify on prediction markets

Texas senators heard from the American Gaming Association (AGA) and Kalshi on 15 September at a Senate Committee on State Affairs hearing, reported by iGaming Business.

For operators and affiliates with event-contract exposure, the hearing sets out the arguments likely to shape state-level action.

What happened

The hearing ran for 62 minutes. Giving evidence were Tres York, vice president at the AGA, and Kalshi's Robert DeNault, who serves as its head of enforcement and legal counsel.

The AGA argued that, in substance, an event contract on one NFL team defeating another is no different from an identical bet placed at a sportsbook. Asked by Senator Bob Hall how the state should proceed, York advised seeking an order requiring prediction markets to geofence their platforms statewide. "Prediction markets think they can mess with Texas," York said.

Hall did not see a distinction between event contracts and sports wagers.

Problem gambling expert Brianne Doura-Schawohl also testified. She pointed to a study finding that sports betting and prediction markets form part of the long-term financial plan for 52% of Gen Z respondents. She criticised a Kalshi competitor for a feature that lets minors over 17 link an investment account to buy and sell event contracts, calling the opportunity "very dangerous" for teenagers susceptible to harm.

Tribal developments

In the same week, Indian Gaming Association (IGA) leaders met CFTC Chair Michael Selig on prediction market issues. Chair David Bean judged the discussions mostly unproductive.

Later that week, the Tunica-Biloxi Tribe of Louisiana announced a tribal prediction market app powered by Kalshi. The app will go live via SaltTrade Derivatives, which was recently set up as a subdivision of a tribal-owned enterprise. iGaming Business reported it as the first partnership between a prediction market and a federally recognised sovereign nation. Chairman Marshall Pierite said in a statement that the tribe will use Kalshi's infrastructure and market expertise to build its own trading application.

Why it matters

Prediction market operators and affiliates promoting event contracts should review their state-level geofencing and legal exposure. The AGA's York advised the state to seek a statewide geofencing order.

The Kalshi partnership with the Tunica-Biloxi Tribe could point to another structure: tribes operating their own applications on a prediction market provider's infrastructure. The IGA's unproductive talks with the CFTC could suggest tribal positions on the category are not uniform.

The volume of state activity is also relevant. Eilers & Krejcik Gaming research from April found that 43% of sports event contract activity came from Texas and California, so policy decisions in those two states could be material to the category as a whole.

What's next

iGaming Business reported that the hearing provided a blueprint for how the state will evaluate prediction markets in 2027. Before then, stakeholders will follow the November elections, which include the governor's office, the attorney general's office and a US Senate seat. Greg Abbott and Dan Patrick are both up for re-election. Attorney General Ken Paxton is running for the US Senate against Democrat James Talarico, and state Senators Mayes Middleton and Nathan Johnson are competing to succeed him as attorney general.